Accounting for Managers
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Course Introduction
Accounting for Managers is designed to equip future business leaders with a thorough understanding of financial and managerial accounting principles, emphasizing their practical application in decision-making processes. The course explores key topics such as interpreting financial statements, budgeting, cost analysis, performance measurement, and financial planning. Students will learn how to analyze accounting information to make informed managerial decisions, allocate resources effectively, and assess organizational performance. With a focus on both theoretical frameworks and real-world case studies, the course prepares managers to communicate financial information clearly and use it to drive strategic business outcomes.
Recommended Textbook Management Accounting 6th Canadian Edition by Charles T. Horngren
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Chapter 1: Management Accounting and Management Decisions
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Sample Questions
Q1) Discuss the role that management accountants play in the company's value-chain functions.
Answer: Management accountants play a key role in planning and control. Throughout the company's value chain, management accountants gather and report cost and revenue information for decision makers.
Q2) Which of the following is a characteristic of both profit-seeking and nonprofit service organizations?
A) Labour is intensive.
B) Output is usually difficult to define.
C) Major inputs and outputs cannot be stored.
D) All of the above are characteristics.
Answer: D
Q3) Planning determines action, action generates feedback, and feedback influences A) reports.
B) accounting systems.
C) further planning.
D) deviations.
Answer: C
Q4) Deviations from plans. Answer: Variances
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Chapter 2: Cost Behaviour and Cost-Volume Relationships
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Sample Questions
Q1) The break-even point is located at the intersection of the total revenue line and the total expenses line on a cost-volume-profit graph.
A)True
B)False
Answer: True
Q2) If total fixed costs increased to $156,750, then break-even volume in dollars would increase by
A) 12.3 percent.
B) 20.0 percent.
C) 34.3 percent.
D) 10.0 percent.
Answer: D
Q3) If the tax rate is 40 percent, how many units must be sold to earn an after-tax profit of $60,000?
A) 4,000
B) 1,500
C) 2,640
D) 2,546
Answer: D
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Chapter 3: Measurement of Cost Behaviour
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Sample Questions
Q1) Activity analysis is the process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service.
A)True
B)False
Answer: True
Q2) Measuring cost behaviour involves understanding and quantifying how activities of an organization affect levels of costs.
A)True
B)False
Answer: True
Q3) The coefficient of determination costs is
A) 0.73.
B) 0.81.
C) 0.90.
D) 1.00.
Answer: B
Q4) The application of cost measures to expected future activity levels to forecast future costs.
Answer: Cost prediction
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Chapter 4: Cost Management Systems
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Sample Questions
Q1) The unit product cost for Product B using absorption costing is
A) $3.16.
B) $2.80.
C) $2.60.
D) $2.45.
Q2) Variable costing regards fixed manufacturing overhead as
A) an unexpired cost.
B) an inventoriable cost.
C) a charge against sales.
D) a product cost.
Q3) Which of the following accounts would appear in the current asset section of a merchandiser's balance sheet?
A) Direct materials inventory
B) Finished goods inventory
C) Merchandise inventory
D) Work in process inventory
Q4) Indirect costs can be identified specifically with a given cost objective in an uneconomical way.
A)True
B)False
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Chapter 5: Cost Allocation and Activity-Based Costing Systems
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Sample Questions
Q1) If the allocation is for performance evaluation, variable service department costs should be allocated based on the actual rate and actual usage.
A)True
B)False
Q2) Accounting is an example of a producing department.
A)True
B)False
Q3) If total payroll processing costs are $64,000 and they are allocated on the basis of number of employees, the amount allocated to the New Department should be
A) $44,800.
B) $16,000.
C) $10,667.
D) $19,200.
Q4) Activity-based accounting systems
A) accumulate overhead costs by department.
B) can turn many indirect overhead costs into direct costs.
C) are less complex and therefore less costly than traditional systems.
D) can be used in manufacturing firms only.
Q5) The time from initiating production to delivering the goods to the customer.
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Chapter 6: Job-Costing Systems
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Sample Questions
Q1) The excess of actual overhead over the overhead applied to products is called
A) overapplied overhead.
B) underapplied overhead.
C) overestimated overhead.
D) prorated overhead.
Q2) The ending inventory of work in process is
A) $260,000.
B) $254,000.
C) $128,000.
D) $72,000.
Q3) The entry to record the requisition of direct materials would include a debit to WIP Inventory.
A)True
B)False
Q4) Two extremes of product costing are job-order costing and normal costing.
A)True
B)False
Q5) A difference between actual overhead and applied overhead.
Q6) A system that accumulates manufacturing costs by jobs.
Q7) The overhead assigned to production using a predetermined overhead rate.
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Chapter 7: Process-Costing Systems
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Sample Questions
Q1) When there is beginning work-in-process inventory, the weighted-average method of process costing must be used.
A)True
B)False
Q2) In process costing, the journal entry to record direct labour would include a
A) debit to Accrued Payroll.
B) credit to Factory Overhead.
C) debit to Work-in-process Department Name.
D) credit to Finished Goods.
Q3) The equivalent units for conversion costs are
A) 200,000.
B) 185,600.
C) 176,600.
D) 164,000.
Q4) The total cost of ending work-in-process inventory is
A) $704,000.
B) $584,000.
C) $528,000.
D) $480,000.
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Chapter 8: Relevant Information and Decision Making: Marketing Decisions
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Sample Questions
Q1) The average target profit percentage for setting prices as a percentage of prime costs would be
A) 254 percent.
B) 368 percent.
C) 84 percent.
D) 39 percent.
Q2) If a maximum of 10,000 units of A and/or B can be sold, it is best to A) produce B only.
B) produce A only.
C) produce 2,500 units of A and 7,500 units of B.
D) produce 5,000 units of A and 5,000 units of B.
Q3) Assuming product line Z is discontinued and the space formerly used to produce product Z is rented for $4,000 per year, operating income will A) increase $2,200.
B) increase $3,000.
C) increase $4,000.
D) increase $4,800.
Q4) The predicted future costs and revenues that will differ among alternative courses of action.
Page 10
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Chapter 9: Relevant Information and Decision Making: Production Decisions
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Sample Questions
Q1) Assuming no other use of their facilities, the highest price that Pett should be willing to pay for 5,000 units of the part is
A) $105,000.
B) $70,000.
C) $85,000.
D) $60,000.
Q2) Any costs beyond the split-off point.
Q3) Which of the following is NOT likely to be relevant in a decision to replace equipment?
A) Cost of new equipment
B) Book value of old equipment
C) Selling price of old equipment
D) Maintenance costs of old equipment
Q4) In processing Product C further,
A) profits will decrease by $7,000.
B) incremental profits will exceed incremental costs.
C) profits will increase by $25,000.
D) the additional revenue produced will exceed the additional costs.
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Q5) A cost for which the outlay has already been made and that cannot be affected by a future decision.
Chapter 10: Capital Budgeting Decisions
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Sample Questions
Q1) Capital expenditure models that identify criteria for accepting or rejecting projects without considering the time value of money.
Q2) Using the cost capital as the discount rate, the net present value of the project is
A) $89,360.
B) $108,480.
C) $114,680.
D) $228,180.
Q3) The cost of assets is recognized by the initial outlay, not by depreciation as computed under accrual accounting.
A)True
B)False
Q4) Tex Corporation trades in a class 10 (30%) asset during the current year. The opening UCC balance in the class 10 pool is $420,000. Tex trades in an asset for $25,000, which he sets off the $125,000 he pays for a new class 10 asset. The tax marginal rate is 35%. The nominal after-tax rate of return is 10%.
a. Calculate the UCC balance at the end of the year.
b. Calculate the tax shield on the trade in.
c. Calculate the NPV cash outflow on the trade in.
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Chapter 11: The Master Budget
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Sample Questions
Q1) The total expenses for the month of April will be
A) $45,300.
B) $38,400.
C) $31,200.
D) $38,100.
Q2) ________ are the most forward-looking budgets, which set the overall goals and objectives of the organization.
A) Strategic plans
B) Capital budgets
C) Pro forma statements
D) Continuous budgets
Q3) A budget that describes expected sales in units and dollars for the coming period.
Q4) When budgets are formulated with the active participation of all affected employees, the process is called
A) financial budgeting.
B) mathematical budgeting.
C) participative budgeting.
D) relative budgeting.
Q5) Producing forecasted financial statements for five- or ten-year periods.
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Chapter 12: Flexible Budgets and Variance Analysis
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Sample Questions
Q1) What are the total manufacturing costs for 15,000 units?
A) $120,000
B) $980,000
C) $900,000
D) $1,080,000
Q2) Assigning the variances to the inventories and cost of goods sold related to the production during the period the variances arose.
Q3) The usage variance for direct material is
A) $10,000 unfavourable.
B) $9,000 unfavourable.
C) $9,000 favourable.
D) $10,000 favourable.
Q4) What is the net income for 10,000 units?
A) $90,000
B) $120,000
C) $300,000
D) $270,000
Q5) The differences between the master budget amounts and the amounts in the flexible budget.
Page 14
Q6) The amount of fixed manufacturing overhead applied to each unit of production.
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Chapter 13: Management Control Systems, the Balanced
Scorecard, and Responsibility Accounting
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Sample Questions
Q1) To create a management control system that meets the organization's needs, designers need to consider all of the following EXCEPT
A) existing constraints.
B) external reporting requirements.
C) internal controls.
D) costs versus benefits.
Q2) The contribution controllable by segment manager is
A) $67,500.
B) $37,500.
C) $25,000.
D) $17,500.
Q3) Decreasing cycle time
A) requires a low quality product or service.
B) creates reduced flexibility and slower reactions to customer needs.
C) requires smooth-running processes.
D) results in bringing products or services less quickly to customers.
Q4) Segments are responsibility centres for which a separate measure of revenues and costs is obtained.
A)True
B)False
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Chapter 14: Management Control in Decentralized Organizations
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Sample Questions
Q1) In measuring income, either the net book value or the gross book value can be used.
A)True
B)False
Q2) The result of the calculation, which divides income by revenue is called
A) income percentage of revenue.
B) residual income.
C) capital turnover.
D) return on investment.
Q3) Incentives do not enhance managerial effort toward goal congruence.
A)True
B)False
Q4) What is the net income?
A) $375,000
B) $625,000
C) $62,500
D) $200,000
Q5) Any action taken in conflict with organizational goals.
Q6) Revenue divided by invested capital.
Page 16
Q7) The decision-making power of segment managers.
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